Lenders Seize Opportunity Amid Weak Share Prices, Set to Drive Largest Buyback Surge in Four Years
Singapore’s top lenders are stepping up their stock repurchases as a result of recent dips in their share prices. This surge in buybacks is contributing to what is shaping up to be the biggest wave of corporate buybacks in the city-state in four years.
From April 1 to April 23, 2025, the buyback activity in Singapore has been marked by the dominance of its largest banks, led by DBS Group Holdings Ltd. The country’s biggest lender has accounted for nearly half of all stock repurchases in this period. Following DBS, United Overseas Bank Ltd. (UOB) and Oversea-Chinese Banking Corp. (OCBC) have also been actively buying back their own shares, collectively contributing to an impressive spike in the total value of corporate buybacks.
A Close Look at the Numbers: DBS Leading the Charge
DBS, which stands at the forefront of Singapore’s banking sector, has led the charge in the buyback race. The bank’s stock repurchases alone make up almost 50% of the total buybacks carried out in the city from the beginning of April to late April. This aggressive buyback strategy is being viewed as a response to the recent weakness in its stock price, which saw a noticeable decline despite solid earnings reports earlier this year.
For context, DBS’s buyback activity is part of a broader trend where banks in Singapore are capitalizing on the lower prices of their shares, with an eye on bolstering investor confidence and boosting shareholder value. This move is not just about stock price support; it also signals a long-term commitment by the banks to return value to their shareholders, especially as they prepare for the anticipated upswing in market conditions.
UOB and OCBC Join the Buyback Trend
While DBS is leading the charge, UOB and OCBC are also contributing significantly to the corporate buyback volume in Singapore. UOB, for instance, is responsible for about 25% of the buybacks in the city. Though not as aggressive as DBS, UOB’s repurchase activity has helped to reinforce the momentum in the local stock market.
OCBC, the third largest of the three major banks in Singapore, holds just over 8% of the total buybacks. While this number is lower compared to DBS and UOB, it still represents a substantial investment in its own shares, reflecting confidence in the bank’s long-term prospects and market stability.
Market Reaction: Why Buybacks Are Becoming More Popular
Corporate buybacks are often viewed as a positive signal by the market. When a company buys back its shares, it’s essentially telling the market that it believes its stock is undervalued. In the case of Singapore’s largest banks, the buybacks are being seen as a strategic move to support their stock prices in the short term, while also returning excess capital to shareholders.
The rising popularity of buybacks in Singapore is also a result of regulatory changes and favorable conditions for banks. In recent years, the regulatory framework around capital returns has been loosened, making it easier for banks to distribute excess cash back to their shareholders. Additionally, with low-interest rates and relatively stable macroeconomic conditions, many banks find it more lucrative to repurchase shares than to hold onto idle cash.
The Bigger Picture: What This Means for the Market
This trend is not just confined to Singapore’s banking sector. Other sectors across Asia have seen similar buyback activity as companies look to take advantage of undervaluation in their stocks. However, Singapore’s banks are particularly active due to their strong capital positions and the recent volatility in global financial markets.
The surge in buybacks signals strong confidence in the local market, as well as in the resilience of Singapore’s banking sector. Despite global economic uncertainty and regional challenges, the banks are demonstrating their ability to weather the storm and return value to their investors. This is an optimistic sign for investors looking to the future, particularly those invested in Singapore’s financial markets.
Looking Ahead: What’s Next for Singapore’s Banks?
As the buyback trend continues into the second quarter of 2025, market observers will be watching to see how the banks balance their stock repurchases with their other growth strategies. There are questions about whether this level of buyback activity will continue, or if banks will shift their focus back to other areas such as lending and expanding their market share in Asia.
For now, though, the data suggests that Singapore’s banks are playing a key role in driving the biggest corporate buyback surge in four years. With more banks likely to follow suit, the coming months may see even more repurchases, further supporting the local stock market and giving shareholders a reason to feel optimistic about the future.
